Anglo American Platinum (Amplats) is about to embark on one of the riskiest aspects of mining in SA by relocating communities near its Mogalakwena mine as it prepares to launch an expansion at its most profitable asset.
Amplats, one of the world’s largest suppliers of platinum group metals (PGMs), is undertaking studies to expand the mine by up to 600,000oz of PGMs, taking it to nearly 2-million ounces a year.
Depending on the options it chooses, the capital expenditure could reach R23bn.
Investment funds and financial institutions hold mining companies to the socially acceptable principles underpinning environmental, social and governance criteria that must be met to attract and retain investors and loans. Any deviation from these standards could result in a company being cut loose by funds and unable to raise reasonably priced debt.
Moving established communities from their land to make way for mining, if handled poorly, could trigger the alarms on compliance with socially acceptable mineral extraction, attracting not only adverse publicity but jeopardising otherwise secure holdings of large tracts of shares by funds.
CEO Natascha Viljoen said Amplats was aware of recent community unrest at other mining companies, most notably Richards Bay Minerals (RBM), where three people have been murdered, and the Prieska mine owned by Australia’s Orion Minerals. In an echo of recent events at Rio Tinto’s RBM, an official at the Mogalakwena mine in Limpopo was murdered in January “on the basis of something very similar about procurement”, she said.
The Minerals Council SA has said vested interests have increasingly taken over or hijacked procurement or community employment initiatives. It has become a serious source of concern for companies as unrest, violence and intimidation were often encouraged and spread in mining communities to bully companies into providing these contracts.
Asked in an interview how Amplats would prevent its resettlement plans being derailed or hijacked by third parties, Viljoen said: “We don’t have a silver bullet on this one. If I were to tell you that we knew exactly how we’d do it, I think we’d be naive. We’ll follow best practice, be very transparent, take our time and engage properly.”
Amplats plans to move 1,000 households at Skimming-Leruleng, 1km to the west of the open pit mine. Studies were done to determine whether the community had to be relocated or if there was a way to minimise the disruption to them by starting underground mining, changing the pit design and blasting methods.
“In the case of Skimming-Leruleng, these measures slightly reduce the urgency of relocating the village but are not able to avoid or reduce the displacement impact and need for resettlement,” Amplats spokesperson Jana Marais said. “The relocation of Skimming-Leruleng will extend the life of mine and enable the operation to reach its full potential for the benefit of all stakeholders.”
The history of relocations indicated these could be difficult processes that “hold the potential to delay mining projects”, said Chris Nicholson, an analyst with RMB Morgan Stanley.
Amplats is fully cognisant of the difficulties, having moved 706 households in the Ga-Pila village at the start of 2000, with another two communities, the Ga-Puka and Ga-Sekhaolelo, entailing 957 households resettled from 2005. There are still 32 of the latter to relocate.
These two resettlement programmes have been a source of friction for years, with sporadic bouts of unrest in an area of high unemployment, with a common refrain from protesters being that Amplats has not fulfilled promises of jobs and social development.
The most recent high-profile bout of unrest was in 2015, when violent protests slowed operations and prompted then mines minister Ngoako Ramatlhodi to intervene.
To avoid a repeat of mistakes or unhappiness, Amplats will launch a 30-month programme in August to consult all affected households as it nears the end of a study into the expansion of Mogalakwena, Viljoen said.
“We are starting early because we want to make sure we do this properly and that we’re fully aligned with global best practice and Anglo’s social way. It’s important to get this right,” she said.
In the planning phase that will end in 2023, Amplats will agree with affected households a monetary and/or replacement of lost assets, resources and for the inconvenience. Amplats will also provide “support for livelihood restoration and enhancement, re-establishment of social networks, and restoring or improving the social functioning of the community”.
Speaking after the presentation of record interim financial results and its highest dividend payout of R46bn, Viljoen said Amplats wanted the communities about its mines to realise the benefits from profitable, well-run mines instead of disrupting operations for third parties that did not have their broader interests at heart.
Amplats spent R2bn in communities near its mines in the first half of this year on procurement, services and other investments compared with R3.5bn in 2020, she said.
Correction: July 27 2021
An earlier version of this story reported that first-half spending on procurement was R4bn; it was in fact R2bn.
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